CDC mulling online games spin-off

PUBLISHED : Saturday, 27 May, 2006, 12:00am
UPDATED : Saturday, 27 May, 2006, 12:00am

Software service provider posts 392pc rise in quarterly profit

CDC Corp, a computer software service provider, may spin off its online games unit for a separate listing as it announced a 392 per cent jump in first-quarter profit.

The Nasdaq-listed company said it was seeking advice from investment bankers on the possible spin-off or other options to unlock the value of its online games business. CDC Games generated US$2.2 million revenues in April, up 18 per cent from March. It expects to finish negotiations for two new online games in the second quarter of this year.

Earlier this year, CDP Corp announced that it was considering spinning off its software unit.

CDC Corp said its profit jumped to US$5.9 million in the quarter ended March 31 from US$1.2 million a year ago with revenues rising 14.9 per cent to US$64.6 million.

It expects net income to grow about 13 per cent in this quarter to between US$5.8 million and US$6.3 million. Revenue is forecast to increase by 10 per cent to between US$70.6 million and US$71.6 million.

The company's software business, CDC Software, generated US$53 million of revenue in the first quarter, up 13.7 per cent from a year earlier. Consulting and services revenues accounted for 54 per cent of software business turnover to US$28.89 million, up 21.5 per cent a year earlier.

Revenues from software licensing and maintenance were US$8.8 million and US$15.4 million, respectively.

The company secured 55 new customers in the first quarter, 16 of whom were from the mainland.

Its revenues from China rose by 24 per cent over the same period last year.

In order to boost the sales in China and other emerging market such as Eastern Europe, the company started a franchise partner programme in April and budgeted US$20 million for investment in channel partners.

The company is expected to announce the first franchise partner in the next quarter.